Camden bullish on Houston's inner city

This is a rendering of a new Camden apartment development in Midtown, where urbanization is booming.

This is a rendering of a new Camden apartment development in...

The head of Houston-based Camden Property Trust on Wednesday touted Houston's job growth and strong demand for apartments during a first-quarter earnings call in which he discussed two major projects planned for the inner city.

The company's Camden McGowen Station project, a proposed eight-story building in Midtown, is expected to break ground by the end of the year.

The company said it did not yet have a start date for the second project it is proposing, a downtown complex expected to be built in two phases on about three acres. Camden recently spent $15.6 million on the land.

"There's a renaissance going on in downtown Houston," said Camden's chairman and CEO Ric Campo. "There's really sort of an urbanization that's been going on across the country for the last 10 years that has finally caught up in downtown Houston."

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The downtown project is expected to qualify for the city's recently expanded Downtown Living Initiative, which offers tax breaks to builders who develop multifamily units in the city's core. Multiple developers have applied to take part in the program.

Camden, a real estate investment trust that builds in high-growth markets like Atlanta, Charlotte, Austin and Phoenix, said Houston was one of its best-performing markets during the quarter, with 6.5 percent revenue growth.

"Our markets continue to produce outsized job growth, keeping development leasing robust and the threat of oversupply, not an issue," Campo said during the conference call.

Units still needed

Houston's multifamily development has been on overdrive, and some have questioned whether Houston may end up with too many units.

During the financial crisis, there was little new construction, leading to today's strong demand, Campo said.

"Houston had 125,000 people move here last year, 120,000 jobs a year before, 80,000 last year, and they're thinking 70,000 to 80,000 this year," he said. "Occupancies are 96 percent, and people are moving in every day and there's no place for them to go."

Camden's president, D. Keith Oden, said rents at its new Midtown development along Main at McGowen are projected to be in the high-end range of around $2.30 per square foot.

The six acres it is building on also will include retail and a three-acre city park.

"We think this is going to be one of the most desirable places in Houston," Oden said. "The property is adjacent to the light-rail stop, so you can get on the light rail, go downtown or go to the medical center."

During the call with investors and analysts, Campo was asked about zoning in light of the recent Ashby high-rise ruling. Last week, a judge denied a request to put a halt to the contentious residential tower planned for an upscale neighborhood near Rice University.

"Houston may be at a point where the urbanization and the litigation around people not wanting to have high-rise buildings built in their backyard could put pressure on civic leaders to revisit the issue," Campo said.

Stock closes up

Funds from operations, a measure used to evaluate REITs, were $94.8 million, or $1.05 per diluted share, in the first quarter of 2014, compared to $86.6 million, or 97 cents per diluted share, for the same period last year.

Net income was $40 million, or 45 cents per diluted share, during the quarter, compared to $63.5 million, or 72 cents per diluted share for the same period in 2013. Net income for the first quarter in 2013 included a $31.8 million gain on sale of discontinued operations.